Having a couple thousand dollars sitting in a 401k account when you are living paycheck to paycheck can seem a little silly. Sometimes I eye my 401k when the unbelievably high energy bill arrives at the same time the credit card bills and rent statement. With the stock market being a rollercoaster at this time, if you check your 401k often, you will probably see major fluctuations. A word of advice, after yesterday’s stock market drop, it might be best to wait a while before you check your 401k. It can be hard to stomach the changes that occur with retirement funds but it is important to have them. Don’t let the temptation drive you to early withdrawal.

If you are worried about losing money, don’t be. Number one, it is a retirement fund so you won’t need the money for some time. Also, the market has as many highs as it does lows so as long as the retirement fund does not crash right around the times that you are retiring, then you will be fine. Many people think that the contributions to their 401k that are coming out of their pay checks would be better in their pockets. However, if your company provides a match, you are essentially getting free money and what could be better than that?

Another thing to consider when you are eyeing your 401k is that you will be penalized heavily. The 10% that is taken out up front is not the extent of the penalties you will face. Depending on how much you withdraw there can be more penalties at tax time. Also, if you only have a few thousand dollars in your 401k, withdrawing that money for extra cash and bill payment is a bad idea. First of all, most people have more than a little bit of debt. If you are pulling money out of your 401k to put a dent in debt, don’t waste your time. Having a few thousand dollars in your hands, when you are used to having just a couple of hundred at a time can net very bad results. All of a sudden that spa day you totally deserve is doable. Or that expensive game system that you’ve been salivating over somehow ends up in your shopping basket.

Of course, there are ways to ease the financial burdens. Ideally you want to avoid debt and living paycheck to paycheck but I know that these are realities for many people. As soon as you find yourself sliding down the ever slippery financial slope, it is time to put a stop to it. One thing that helped me really get a grip on my finances was drawing up a plan. Knowing what your goals are is very important when it comes to finances. What is it that you hope to achieve and what is the time line? Once you know those things you can devise a plan which could include cutting out little expenses like mobile Internet access. Yes, it is nice to be able to access the Internet on your phone but unless you really need it get rid of it. Catch a great sale on a cable modem and give back the one you rent every month for the cable company. Eat want you need and keep the thermostat as low as you can stand it. Do what you have to do but don’t deplete your retirement fund. For most of us, unlike some previous generations, retirement will be something that we must fund entirely on our own.